I’m working with a buyer who wants to make offers on three properties at once. She said she will terminate two of the contracts when she decides which one she wants to buy. Is this ethical?
No laws or rules prohibit your buyer from making offers on more than one property at a time. Similarly, the Code does not bar you from representing a buyer making simultaneous offers on multiple properties. If the buyer has a termination option for all three properties, she has the contractual right to terminate two—or all three—of the contracts within the termination option periods. However, there is a risk involved that you may want to communicate to the buyer. If any of the option fees are not paid within the time prescribed, it may be deemed that the buyer does not have a valid termination option. In that case, the buyer may not have the ability to terminate one or more of the contracts, which could leave the buyer contractually obligated to purchase more than one property.
Though there may be no “laws or rules to prohibit a buyer” from making offers on more than one property, I believe it runs counter to our ethics as REALTORS. Our ethical obligations to a buyer are to assist them in finding a home. But as buyers agents, we also have an obligation to the sellers of homes, who are usually represented by our fellow REALTORS. This ethical obligation to sellers means that we, as buyers agents, will bring a ready and willing buyer to their property. And when an offer is placed on a property, it is assumed to… Read more »
I’m currently living in SE Texas and in the middle of this crazy sellers market. I’m under contract for the sale of my home and it’s 2 days from the opt out period expiring. However, while finding a home to purchase, we find ourselves stuck at the mercy of the seller that takes their own sweet time to reel in all offers- typically way over asking price. Should I as a buyer just sit back and wait until a seller could potentially not accept my offer and run the risk of not being in the running for other properties? Are… Read more »
I totally agree I am In the same situation as you are, buyers are in the dark when it comes to sellers not obligated to disclose other offers on the table, so do I sit here at idle while the seller makes their mind up, while other potential homes I could have submitted an offer pass me by?
I love this answer! Yes, as Realtors we should exhibit a strong allegiance to our profession regardless to which side of the deal we’re on.
Oh boy, Danny Evatt, I think we need to be VERY careful with terminology to avoid legally tumultuous waters. Your statement, “But as buyers agents, we also have an obligation to the sellers of homes, who are usually represented by our fellow REALTORS”. is troubling for one simple reason – it’s legally inaccurate – assuming you are operating with a buyer’s rep agreement. By definition a “buyer’s agent” has a fiduciary duty to one party only – the buyer. You may feel a sense of comradery with the listing agent because you’re both REALTORS, but to “have an obligation to… Read more »
I am so happy Eldee pointed this out! I cringed when I read what appears to say realtors have obligation to each other first, and to tye client second! I think i will be extremely careful in choosing an agent. I will read every review I can find when making a choice.
ElDee you are totally correct
Totally agree! It seems everything is geared towards the buyers such as different ways to terminate an offer so that the buyers receive their earnest money back even as late as the day before closing.
There are many things that are allowed/legal according to the Texas Real Estate License Act, the laws of the State of Texas and the REALTOR® Code of Ethics. Many of these items that are both allowed and legal would offend many in and out of the business. With that said, in my nearly 40 years of being full time in the industry, I have had many instances where a buyer has written multiple offers with the intention of proceeding with the favorite of the accepted offers. While I have never done this with a buyer I have been on the… Read more »
This is just one more reason that Sellers and Listing Agents should consider charging more than the typical $100 or $150 for the OP. As a Buyer’s Agent, I will not do two offers at the same time. I have yet to see a good reason for doing it and have never lost a Client for refusing to do it.
I agree with the other comments, but just to consider the other side, maybe as a listing agent, we should get in the habit of asking the buyer’s agent if the buyer has open offers on other properties. Similar to a buyer’s agent asking the listing agent if they are working any other offers.
My thoughts exactly Larry!
Larry, To disclose that without the Buyer’s written permission could damage them being able to win any bid. Unlike telling an agent that there are multiple offers on a listing (likely making the buyers maximize their offers), telling a listing agent that a buyer is offering on more than one party diminishes the likelihood theirs will get accepted. That is where the fiduciary responsibility comes in. it would be like a listing agent telling what the offer price is on the offers they have, except even in that situation it aides their client. Buyer’s agency is about representing the buyer,… Read more »
Good point, Larry! If a Listing Agent is supposed to notify Realtors of “multiple offers”, maybe it ought to be mandatory for a Buyer’s Agent to notify the Seller’s agent that he/she is presenting multiple offers. It seems like the opinion from TAR leaves out a whole lot on this subject. Most buyers who want to try such a maneuver don’t really know what they are doing. In any case, the Option Fee ought to be set at a high bar, for the privilege of cancelling on a seller who acted in good faith. But beware: because most buyers who… Read more »
As an agent since 1969, I strongly discourage making multiple offers. That said, there are instances where it may be necessary. One is a client who is relocating, is only in town for a couple of days, must find a house and the market is hot. If they make an offer on one property, don’t hear back before they leave town, and that offer is turned down or beat out, they may be in big trouble. In such situations it may require 2 or even 3 offers simultaneously to get one accepted. The are other similar cases that it may… Read more »
While the post above says ” no laws or rules prohibit your buyer from making offers on more than one party at a time” it excludes the part of Texas agency law that states that a broker owes general duties of honesty and fairness to ALL parties in a transaction. [22 TAC 531.1{1}}. So I guess it comes down to how you define fair and honest. If you as a buyer”s agent think it is fair to the seller and their agent to jump through the many hoops to negotiate an agreement to purchase knowing the buyer is terminating two… Read more »
I agree that entering purchase contracts on multiple properties at the same time, with the intention of terminating some of them is not the most ethical course of action. However, the question skips the step between submitting an offer and the offer being accepted. In most cases, making OFFERS on multiple properties, and then withdrawing the other offers once the first one is accepted can be perfectly fine. You would not be preventing the other Sellers from continuing to show their property or accepting other offers. Yes, it’s a little more work up front for the Buyer’s agent, but it… Read more »
This is a good question. I think the situation depends on several things, two of them being the market and price range. I work with some buyers who are in a highly competitive, multiple-offer market, where it is likely their offer won’t be accepted. In addition, homes in the same market may be Active for only 2-3 days, before they have an executed contract, which gives buyers little time to wait for a response before they might miss out on another opportunity. I see it being akin to a seller having several options when they have multiple buyers. I also… Read more »
FIRST, the question and the response above is ambiguous. Offers versus Option Periods…totally two different things. With an offer, I’m in negotiations…no contract. With an Option Period, I’m in an executed contract. Therefore, I agree with Saleem and Mesia, as the other replies seem to be talking in terms of already accepted offers “in contract”. Those in Option Periods are not offers, they are executed contracts. I would never do that. Fortunately, I haven’t been put in this position very often. However, in a hot market of multiple offers to sellers, especially when my buyer has a critical deadline, my… Read more »
Why is it ethical and accepted in the Real Estate industry that agents work together to help drive up the bidding on a house by letting buyers know that X number of other people are interest or have made an offer. This type of behavior encourage interested buyers to over bid on property that can lead to a bidding war on a property. Yes both agents and the seller win out getting a higher price on the property. . Now if a buyer is trying to get the most bang for their dollar, similar to a seller wanting to get… Read more »
Agreed completely. Why are sellers on a pedestal while buyers are supposed to beg and beg while waiting to see if their offer is accepted?